‘There is inflationary pressure. That is why it is advisable to have a tight budget. It is better not to invest in new projects for now. Because that could further fuel inflation. And the quality of public investment should be increased as much as possible, so that productivity increases. Keeping inflation in mind, we have to think about formulating the next budget.’
State-owned Agrani Bank Chairman Zayed Bakhat said. The economist recently spoke to Jago News about the budget for the next financial year (2024-25). He said that the next budget should be contractionary. New money cannot be printed. New projects should also not be undertaken. Priorities should be fixed so that money is spent more in productive sectors. The interview was conducted by Saeed Shipan, senior reporter of Jago News.
Jago News: In the current situation, what should be given importance in the upcoming budget?
Zayed Bakht: There is an inflationary pressure. That is why it is advisable to have a tight budget. Allocating more to projects that are nearing completion, not investing in new projects for the time being. Because that could further fuel inflation. And the quality of public investment should be increased as much as possible, so that productivity increases. Keeping inflation in mind, the next budget should be formulated.
Jago News: Is it right to intervene if the interest rate increases while reducing inflation?
Zayed Bakht: Interest rates don’t seem that important to me. Because private investment is discouraged at the moment. If credit growth were too high in the private sector, then there would be a matter of controlling demand by raising interest rates. Bangladesh Bank’s credit flow to the private sector is less than the target of credit flow. So why should I raise interest rates?
We have to emphasize on direct taxes. This is nothing new, it is being said all the time, but we have failed to take effective action. Taxable people should be brought under tax. Tax evasion should be prevented.
Jago News: How should the deficit in the budget?
Zayed Bakht: There is no deficit in the revenue budget. What happens in the overall budget is in the development budget. There will be a deficit in the development budget. There is always a mechanism for shortfalls in the development budget. Foreign aid loans and domestic loans. A slight contraction of the overall budget is desirable. And in terms of spending money, priority should be fixed, so that it contributes more to production.
Jago News: Should the government borrow more from foreign aid or debt to meet its budget deficit, or should it borrow more from domestic sources?
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Zayed Bakht: It depends on the situation. Abroad is not always the best option if there are tough conditions for taking out a foreign loan or if the interest rate is high. And if there is idle money in the private sector then why not take it. It is better not to print new money.
Jago News: On the one hand revenue is low, on the other hand the target of revenue is not achieved. What steps should be taken to increase revenue?
Zayed Bakht: Mainly we have to emphasize on direct taxes. This is nothing new, it is being said all the time, but we have failed to take effective action. Taxable people should be brought under tax. Tax evasion should be prevented. At the moment our revenue is very negligible.
Allocations are less than what we need for education and health. Of course, it will be good for us to increase the allocation in education and health sector as much as possible.
Jago News: What is your advice on social safety net?
Zayed Bakht: It will be needed. Because inflation is not going away easily. So with the social safety net, those who are affected by it (inflation) can be given as much protection as possible.
Jago News: Is the government providing assistance to one crore families under the social security net, enough?
Zayed Bakht: This coverage should be extended. And it should be enforced, so that those who are not qualified do not enter here. It must be confirmed.
Jago News: What is your advice on education and health sector?
Zayed Bakht: Allocations are less than what we need in education and health. Of course, it will be good for us to increase the allocation in education and health sector as much as possible.
Jago News: Currently there is a dollar crisis. In this situation, is it necessary to take any special plan in the next budget in terms of increasing exports?
Zayed Bakht: The key to export is export diversification. That cannot be done with another budget. And not everything is done with financial incentives. There are other issues here, there are issues of technology. In that respect, our weakness has remained for a long time. We have become more dependent on garments.
MAS/ASA/GKS
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